Since its initial public offering (IPO) in March 2008 amid the chaos of the Great Financial Crisis, Visa (V -0.05%) stock has absolutely clobbered average market returns. Visa's total return (which accounts for reinvested dividends) has been over 1,700% compared to only about 340% for the S&P 500 (as measured by the SPDR S&P 500 ETF Trust).

Visa has gotten massive lift out of the move from physical cash to the digital exchange of money. Riding a huge secular growth trend such as this certainly helps with investment returns. However, there's more to the story, as few digital payments and fintech investments have done nearly as well. Visa has proven itself as a great allocator of capital for a long time, and that's been the secret to the stock's success.

Visa's ROIC has been good and keeps getting better

As calculated by investment researcher New Constructs, Visa's ROIC (return on invested capital) has been exceptionally good for years. New Constructs calculates ROIC as NOPAT (net operating profit after tax) divided by average invested capital.

A chart showing Visa's ROIC has been well over 20% for the last five years running.

Chart source: The Motley Fool.

What's truly amazing is that Visa's ROIC has remained exceptionally high in good times and bad. Even during the worst of the pandemic, it averaged well over 20% in ROIC. And in the bear market of 2022 and during constant worry over global recession in 2023, Visa's ROIC has actually chugged higher and now sits at record highs.

This is despite the cost of capital (the cost of acquiring cash via debt or equity to invest in business projects as measured by the weighted average cost of capital, or WACC, in the chart above) rising in the last year as the U.S. Federal Reserve has rapidly increased interest rates.

What has Visa been investing in?

Visa and its primary competitor, Mastercard (NYSE: MA), act as a type of digital railway for the movement of money, part of the infrastructure of the digital economy. Visa has some of the world's most efficient data centers, computing hardware, and private telecom networking that process tens of billions of transactions every year.

The beauty of a network like this is it gets more efficient (read profitable) as it facilitates more transactions. The global war on cash and the migration to digital transactions have worked wonders for Visa shareholders.

As its cash inflow has grown, that has enabled Visa to invest in adjacent services. For example, its data security unit has been a solid source of growth, as have investments and small acquisitions of financial software start-ups.

And during the pandemic, the emergence of the blockchain and cryptocurrency market was often cited as a long-term risk to Visa's global money-movement network. Numerous scandals have given crypto a black eye from which it will take many years to recover. Nevertheless, the underlying blockchain technology is promising, and Visa has been making investments here as well to try to future-proof its empire.

Can Visa's epic ROIC run last?

Long story short, Visa has done a fantastic job investing capital. But will it last? ROIC is, after all, a backward-looking metric that isn't necessarily indicative of future returns.

Visa's CEO since 2016, Alfred Kelly Jr., moved over to executive chairman of the board, making way for new CEO Ryan McInerney (Visa's president since 2013). Chris Suh was recently announced as the new CFO. Since ROIC measures management's ability to make good investment decisions, new C-suite leadership is always worth monitoring for any company.

That said, the world continues its move toward more digital systems, currency and financial transactions included. This bodes well for Visa's ability to continue to crank out more cash from its investments over time. Visa stock could remain a market-beating stock for many years to come.